Govt Granted Income Tax Benefits To 2,975 Recognised Startups So Far

SUMMARY

The exemptions are being granted under the Startup India initiative by the government

As of December 31 last year, 1,17,254 startups have been recognised by the department of which 2,975 startups have been granted the exemption

By the end of March 2023, 1,100 startups got this exemption

In an effort to encourage and boost the growth of Indian startups, the government has granted income tax exemptions to as many as 2,975 Department for Promotion of Industry and Internal Trade (DPIIT)-recognised startups so far.

The exemptions are being granted under the Startup India initiative by the government.

Citing DPIIT joint secretary Sanjiv Singh, Moneycontrol reported that as of December 31 last year, 1,17,254 startups have been recognised by the department. The number of the recognised startups getting tax benefits was 1,100 till March 2023, and now it has increased to 2,975 startups, he added.

He further added that the government is working on formulating a standard operating procedure (SOP) for examining and fast-tracking applications for granting eligibility certificates.

According to him, these certificates are needed to claim tax benefits.

“We are planning to have a SOP where we will put up all kinds of issues, which come before the inter-ministerial board and try to sort it out. In fact, we have an internal target of March 31, before that, we will finish all the pending applications (about 1,500), which are there for eligibility certificates,” Singh said.

He further added that the department is planning to change the entire process of increasing ease of carrying out business for the startups to ensure that they don’t face any difficulty due to lack of eligibility certificate.

The government has, so far, granted 1,800 intellectual property rights to budding entrepreneurs and on the funding front, the startups are looking at alternatives such as debt funds, Singh added.

He said that equity funding may have declined but the ecosystem is still getting money through other routes such as IPO. For these entities, the government has rolled out different schemes including the Startup India seed fund scheme, fund of fund scheme, and credit guarantee scheme.

In October 2023, DPIIT issued a circular stating that the startups recognised by the department will be exempted from Angel Tax. However, the tax will be levied on the startups that don’t meet the DPIIT criteria.